Motorola fairly likely to win German patent injunction against iCloud in February -- Apple demands $2.7 Billion bail

Click to Enlarge.  The V-SIM Patent Covers "ANY"
3rd Party Authentication Done Outside the SIM Card.
i.e. Purchasing iTune on iPhone, Square, etc.

From the FOSS Patents Blog: The German city of Mannheim is slowly but surely giving Cupertino some serious headache.

After a default judgment against Apple Inc. over two patents and preliminary indications (a week ago) of a possible injunction or two (or three) in Samsung's favor in the second half of January, Apple experienced a dreadful hearing today in an action brought by Motorola Mobility against Apple Sales International, an Irish company that supplies products to many if not all German customers. The court doesn't appear to buy any of Apple's defenses at this stage. It may still change mind until the ruling, which is scheduled for February 3, 2012, 9 AM local time, but if it had had to rule today, I have no doubt that Apple would have lost.

In this litigation, MMI asserts only one patent:

EP (European Patent) 0847654 (B1) on a "multiple pager status synchronization system and method"; this is the European equivalent of U.S. Patent No. 5,754,119. This is one of the two patents asserted in the action in which a default judgment was entered against Apple.

Apple has not raised any standards-related defenses with respect to this one. Apple's counsel said that they're not currently aware of any industry standard this patent is essential to. (And there wasn't any talk about patent exhaustion either -- this is not a baseband patent.)

The court consistently rejected Apple's attempts to narrow the scope of the patent. The interpretation of the words "responsive to" was discussed in detail, and MMI's broader construction is the one supported by the court, at least at this stage. Apple will file a post-hearing pleading (as will MMI) until December 16, 2011. But it will be hard to achieve a narrower interpretation of the patent.

Apple's invalidity contentions appear to be dead in the water as far as the Mannheim court is concerned. Apple would have to show that their nullity action is more likely than not to succeed, and the court is very far from believing so.

Accused technologies: MobileMe and iCloudThe related complaint was filed on April 1, 2011 (April Fools' Day -- what a day to bring a patent infringement suit).

At the time, MMI accused Apple's MobileMe service of infringing the patent. In a later pleading, which was submitted after Apple's announcement of the iCloud ahead of this year's Worldwide Developer Conference (WWDC), MMI told the court that it also considered the iCloud to infringe the related patent. According to MMI, MobileMe is "integrated" into the iCloud, and this also results in a name change. But Apple says that MMI's infringement accusations lack specificity and therefore refuses to defend itself against them. However, unlike in the United States, where a party could move for the dismissal of non-actionable claims, the German court isn't even interested in this. The presiding judge made it clear that if an injunction is ordered, it will relate to the infringement of a particular patent by whatever technology (by whichever name it may go), without specifying any products by name.

This means that a February ruling in MMI's favor would leave some important questions unanswered, and would give rise to subsequent disputes over the enforcement of an injunction against particular products and services.

The issue for Apple here is that it would probably (if not almost certainly) be accused of infringing the patent-in-suit with any products containing the iCloud client software. While the patent covers a synchronization technology that requires a server, and Apple Sales International does not operate the servers (maybe Apple Inc. does, or otherwise some Apple subsidiary other than the Irish distribution organization), all Apple devices containing the client software could be deemed to infringe the patent-in-suit contributorily.

In light of this risk, Apple's lawyers have asked the court to determine that MMI will have to give a 2 billion euro bail(US$ 2.7 billion based on today's exchange rate) if it seeks to enforce the patent. The purpose of such a bail is to ensure that an alleged infringer will be compensated if the enforced injunction is later overturned by an appellate court. The court was wondering whether that hefty amount truly reflects the economic damages Apple would suffer from enforcement, given that the iCloud is only one Apple offering and doesn't correspond to the entire value of its products. But Apple's lawyers insisted that an enforcement against its product sales in Germany could result in damages of that magnitude.

MMI's counsel was moderately receptive to the idea of setting different bails for the enforcement of the patent against processes/services and against actual products. I thought MMI's lead litigator believed to be in a strong position and wasn't in the mood to make any concessions.

The presiding judge indicated the possibility of a workaround. For example, the patent relates to highly automated synchronization techniques and might not be deemed infringed if Apple's client software sent certain messages to the iCloud server to trigger synchronization. But Apple's counsel didn't appear willing to downplay the economic relevance of this matter. I also think that the presence of senior in-house counsel from both parties -- sitting next to their German lawyers -- is indicative of the relevance of this action. Apple additionally flew in an outside attorney from California, Christine Saunders Haskett of the Covington & Burling firm.

If the iCloud cannot work around that patent without becoming much less useful (or next to useless in a hypothetical worst-case scenario), Apple will clearly limit its market potential in Germany by removing its client software. Again, it remains to be seen what a non-infringing workaround might look like. Maybe Apple doesn't concede that there are viable workarounds just in order to maximize the bail that Motorola would have to give if it enforces an injunction. But Apple's concerns over the economic implications of this could also be genuine.

On December 2, there will be another Motorola Mobility v. Apple hearing in Mannheim. It's unknown which legal entity or entities will have to defend themselves in that action. I guess the third action is against Apple GmbH (the German subsidiary) and Apple Retail Germany GmbH, which appears to operate the German Apple Stores.

Follow-up on the prohibition of in-court tweetingIn my report on the Samsung v. Apple hearing a week ago I mentioned that the presiding judge didn't allow live tweets from his courtroom. That mentioning resulted in a couple of articles in Germany. Today the presiding judge clarified that the reason why the use of Twitter is prohibited is that one must not use devices in the courtroom that could also be used to record the hearing. The only electronic devices allowed are counsel's portable computers and simultaneous translation equipment. As a result, one must not use smartphones, and therefore can't tweet.

Right after clarifying this at the very start of the session, the presiding judge interrupted the hearing for five minutes so those who (unlike me) hadn't done so previously could place their handsets in lockers.
The attack on the iCloud and the demand for a 2 billion euro bail would actually have been worth tweeting about.


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Debit Cards Are More Dangerous Than Ever Under New Laws

Despite Reforms, Visa and MasterCard Debit Cards Still Put Consumers at Risk, A CreditCardAssist.com Report Finds

You can lose everything in the blink of an eye

A consumer can lose everything in the blink of an eye and there’s no guarantee they’ll ever get it back.

Los Angeles, CA (PRWEB) November 19, 2011

The recent Federal reforms to the banking industry fail to adequately protect Americans with debit cards, according to a report released today by CreditCardAssist.com, a leading credit card intelligence and resources firm. Citing the prevalence of mass debit card theft from corporations like CitiBank and Sony, the reportoutlines a systematic failure in debit cards, especially the ones issued by MasterCard and Visa.

“The entire debit card system is flawed,” said CreditCardAssist.com founder Bill Hazelton. "A consumer can lose everything in the blink of an eye and there’s no guarantee they’ll ever get it back." Studies have shown that a lapse in authentication security has made the information on debit cards easier to steal than any other piece of plastic in circulation. Because “check cards” and “unsecured” debit cards don’t use PIN numbers to validate transactions, they give thieves instant access to a consumer’s personal checking or savings account. As a result, victims could be left penniless for more than two weeks while their bank investigates the case.

"When someone steals your credit card, you can just refuse to pay your balance that month,” Hazelton explained. “But when your debit card is compromised, you’re losing the money you need to pay your mortgage, your medical bills and other necessary expenses -- this makes debit card fraud much more devastating than credit card fraud."

Debit card fraud is especially troubling when considering how easy it is for hackers to steal thousands of consumer debit card numbers at once from merchant and bank databases. This summer, financial giant Citibank had approximately 21 million card numbers stolen from its database when hackers realized they could simply alter their browser’s URL to expose different accounts -- and the personal information held within them. Just days later, Sony Online Entertainment exposed over 100 million user account details in a similar mass hack.
If they don’t report the false charges within two days, victims of debit card fraud are currently liable for up to $500 and if they take longer than two months, they receive no liability protection whatsoever. By contrast, victims of credit card fraud are only liable for $50, no matter the time period. “This regulatory disparity is absolutely putting consumers at risk,” Hazelton says, “consumers need to wake up and demand equal protections for debit cards -- or the problem won’t go away.”

Hazelton is well acquainted with advocating credit and debit card safety. He founded CreditCardAssist.com in order to advise consumers and small business owners on the perils and pitfalls of the credit card industry. Since its establishment in 2004 the company has grown into one of the leading credit card information resources on the Internet, and has been cited by publications like New York Post, the San Francisco Chronicle and Entrepreneur Magazine.
To learn more about Credit Card Assist or to schedule an interview, please email andrew(at)contentfac(dot)com. More information and the entire report can be viewed athttp://www.creditcardassist.com.